Gold Sings A “Hot 'N Cold” Song

And I still believe that my opinion makes sense. Indeed, after the global financial crisis of 2007-2009, we have seen several spring features: low inflation, a bull market in stocks, and a low level of confidence (after all, there was “the most hated rally in the stock market”), which was a legacy of winter, i.e., the collapse of Lehman Brothers and the following economic crisis.

And summer is generally a period of stagflation, which is exactly what I’m expecting. You see, after a strong economic recovery in the nearest quarters, the U.S. economy is likely to return to a mediocre pace of economic growth, but with much higher inflation. After all, there is strong monetary and fiscal stimulation ongoing right now, another feature of summer.

Meanwhile, winter is generally a deflationary period, so the specter of inflation rather suggests that summer may be coming and investors should hedge themselves against waves of gold.

Luckily, gold offers its protection not only against winters, but also against summers. Indeed, gold performs the worst during autumns, when there is disinflation, like in the 1980's and the 1990's, and the best during winters (due to the economic crisis – remember the 2000's?) and the summers (due to high inflation – remember the 1970's?).

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Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does ...

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